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Employee Share Schemes

We advise on tax-efficient employee share schemes including EMI, CSOP, SIP, SAYE, growth shares, and Employee Ownership Trusts to help you motivate and retain key staff.

Providing employees with shares or share options can often be a way to motivate, retain and reward key employees of your business.

There are a number of ways in which a business can structure employee share schemes, and when deciding which to implement it will depend on the circumstances and what the core objectives are.

HMRC Approved Schemes

HMRC has approved share schemes that not only provide a means of motivating, retaining and rewarding employees but also offer tax advantages (to both the employee and employer). These can be summarised as follows:

Certain conditions must be satisfied in order to implement each of the above HMRC approved schemes, for example, SIP and SAYE schemes must be offered to all employees and EMI schemes cannot be implemented by companies with over 250 full-time equivalent employees.

Ensuring the relevant legislative conditions are met, and the relevant implantation steps are followed is fundamental to obtaining the preferential tax treatment offered by the approved schemes. It is therefore important that appropriate tax advice is obtained before implementation.

Growth Shares

In addition to the HMRC approved schemes, there are several other ways key employees can be incentivised through share ownership. An example of this would be growth shares which are often used for companies with high growth aspirations. In essence, a growth share is a separate class of incentive shares that entitles participating employees to share in a proportion of the future growth in value of a company, thus aligning the employees' objectives with that of the company.

Employee Ownership Trusts

Employee Ownership Trusts are also becoming increasingly popular with the trust being used to hold shares on behalf of employees. In effect, the trust becomes a marketplace for the employees to buy and sell shares.

As can be seen from the above, there are a variety of options available when it comes to employee share schemes and therefore a “one size fits all approach” isn’t appropriate.